Sensis e-business Report

Transcription

1 September 2010 Sensis e-business Report The Online Experience of Small and Medium Enterprises

2 Table of Contents INTRODUCTION... 1 ABOUT THE SURVEY... 2 EXECUTIVE SUMMARY... 4 LEVELS OF COMPUTER OWNERSHIP... 6 Equipment ownership...6 Computer ownership trends...7 Expenditure in 2009 calendar year...8 Expected expenditure in 2010 calendar year...9 GETTING CONNECTED Connection levels Reasons for not connecting Expectations for internet connection Broadband connections How the internet is used current and expected usage Current usage by business size Trends in usage What are the essential uses? TECHNOLOGY IN AUSTRALIAN HOUSEHOLDS Equipment ownership and internet connections What Australians are doing online Social networking Our children online Internet usage on mobile phones SOCIAL MEDIA IN BUSINESS Incidence of use USING WEBSITES Website ownership Benefits and costs of the site Website features ELECTRONIC COMMERCE AND SMALL AND MEDIUM BUSINESSES Use of the internet for procurement SME use of the internet to sell Who businesses sell to online Return on investment Degree of interest in engaging in e-commerce Concerns about online commerce and advertising Digital business strategies

3 Introduction The Sensis e-business Report is a special report primarily based on findings from the Sensis Business Index. The Sensis Business Index is an ongoing series of surveys tracking confidence and behaviour of Australia s small and medium enterprises (SMEs). The primary objectives of the Sensis Business Index are to track small and medium business activity over the past three months; expectations over both the current three and, 12-month periods; and to measure overall confidence among SMEs. In addition the Sensis Business Index provides an independent, objective assessment of proprietors experiences and attitudes on key issues. The June 2010 Sensis Business Index included questions on technology usage and electronic commerce (e-commerce). These questions formed the basis of the 2010 Sensis e-business Report. The survey investigated levels of understanding and interest by small and medium businesses in what e-commerce has to offer. Over the past 15 years, Sensis has examined the experiences of small business with electronic technology with the first benchmarking report on technology and small businesses collected in February The trends identified from earlier studies are reported where applicable. The Sensis e-business Report also contains data on Australian consumers experience and adoption of technology, collected as part of a separate sample of 1000 Australian consumers. The Sensis Business Index, and the Sensis e-business Report are initiatives of Sensis as part of the company s commitment to increase understanding of the Australian business and social environments. Surveying is conducted by Sweeney Research. Page 1

4 About the survey The information in this report was primarily sourced from the June 2010 Sensis Business Index and is based on telephone interviews conducted with approximately 1,800 small and medium business proprietors. Businesses interviewed for the Sensis e-business Report were drawn from all metropolitan and major non-metropolitan regions within Australia. Quotas were set on geographical location and type of business in order to produce the standard sample structure shown opposite. Note that the sample excludes businesses in the agricultural sector. Where replacement businesses are recruited, this sample structure is maintained. At the analysis stage, results were weighted by selected ANZSIC divisions within the metropolitan and non-metropolitan region of each state and territory, to help ensure the sample reflected the actual small and medium business population distribution. The Australian Bureau of Statistics (ABS) Business Register, as at June 1998, was used to help weight the sample to be representative of the total business population. The results relating to businesses in this Sensis e- Business Report are based on the responses of businesses surveyed. New South Wales Victoria Queensland South Australia Western Australia Tasmania Northern Territory Location of business Total Australian Capital Territory 150 Total 1800 Division Manufacturing Building/Construction Wholesale Trade Retail Trade Accommodation, Cafés and Restaurants Transport/Storage Finance and Insurance Communication, Property and Business Services Health and Community Services Cultural, Recreational and Personal Services Total Metro Non-metro Size of business Number of full time employees 1-2 Employees 3-4 Employees 5-9 Employees Employees Total Small Employees Employees Total Medium , Page 2

5 The results in this report relating to consumer behaviour are based on a survey of 1,000 Australians. To ensure a good cross representation across the states and territories and by demographics, quotas were set on age, gender and location as detailed in the charts on the right. The results have been weighted according to the latest Australian Bureau of Statistics (ABS) population figures (2006 Census) so that results more closely reflect the population distribution within each state and territory years years years years years years Over 64 years Total Consumer sample structure Demographics Total Consumer sample structure Location Male Female New South Wales Total 168 Metro 134 Non-Metro 34 Victoria Queensland South Australia Western Australia Tasmania Northern Territory Australian Capital Territory Total Page 3

6 Executive summary This special report examines a selection of small and medium sized enterprises and their attitudes towards, and experiences with, e-business. Research with 1,800 SMEs was undertaken across a range of online technologies, including the internet and . Results in this report also include data on Australian consumers, which was collected concurrently through a consumer survey of 1,000 consumers. While the findings of the research are outlined in detail throughout the report, below is an overview of the key findings. Computer equipment Overall, some 96 per cent of SMEs reported owning a computer of some description. This comprised of a 96 per cent ownership level for small businesses and 100 per cent ownership for medium businesses. While ownership of desktop computers rose marginally in the past year, there was a small decrease in the ownership of notebook computers, with 61 per cent of SMEs reporting owning a notebook computer. Despite small fluctuations in these numbers, the overall level of computer ownership amongst SMEs has shown little variation over the past three years. The internet The rate of internet connectivity among small and medium businesses was relatively unchanged during the year, with internet connectivity among small businesses decreasing marginally from 95 per cent to 94 per cent. While 94 per cent of all SMEs currently have internet access, only a further two per cent expect to connect within the next 12 months and the remaining four per cent do not expect to be connected within the year. Some 96 per cent of SMEs with internet access have broadband internet access, which was also unchanged from the past year. The single most important reason for use of the internet (as identified by 98 per cent of all internet-connected SMEs) remains (to communicate with clients, customers and suppliers). The second most important use of the internet was to look for information about products and services (94 per cent), while the third highest usage was to get reference information or research data (88 per cent). Australians use of technology The uptake of technology in Australian households was lower than was the case for SMEs. Some 91 per cent of households reported having a computer of some description, with 88 per cent of households being internet enabled and 83 per cent having broadband connections. Overall, 64 per cent of Australians had made purchases online in the past year. Websites The proportion of small businesses with a website continued to increase over the past year from 54 per cent to 60 per cent. A further 11 per cent of online small businesses indicated an intention to have one within the next 12 months. Website penetration also rose for medium businesses, rising from 85 per cent in 2009 to 89 per cent in A further six per cent of medium businesses indicated they expected to build a website within the next 12 months. Social media in SMEs Some 10 per cent of SMEs connected to the internet reported that they used social media in their business. The most common usage of social media was to have a page on a social network site for their business, with blogs and ads on social networks also popular. Six in ten SMEs that used social media reported that it had a positive impact on their business. Page 4

7 In terms of website effectiveness, 73 per cent of businesses indicated their website increased their business effectiveness. The reason most SMEs provided was that the website had made it easier for people to find their business. Use of the internet for procurement The past year has seen stable use of the internet for procurement purposes. This is reflected in the relatively little change in the proportion of SMEs procurement activities, with the exception of paying for products and services, which increased slightly over the past year. There was also little change in the amount of business done online by SMEs as a proportion of their total purchasing activities in the past year. The proportion of SMEs that indicated they did more than five per cent of their total procurement online was unchanged at 65 per cent, and the proportion that did the majority of their business online was unchanged at 21 per cent of SMEs that purchase online. The most common online purchases made by SMEs during the year continued to be airline bookings, accommodation, software, and stock and merchandise. Use of the internet to sell Online selling remained a popular trend that continued to grow during the past year. The percentage of SMEs taking orders online has increased from 56 per cent in 2009 to 58 per cent in Online selling as a share of total sales activities saw a decline over the course of the year among e-commerce oriented SMEs, dropping from 26 per cent to 24 per cent. Along with the fall in the average level of online sales, the proportion of online SMEs indicating they took more than five per cent of their total sales orders online increased over the year from 64 per cent in 2009 to 61 per cent in Some 13 per cent of SMEs who used e-commerce to sell made the majority of their sales online, which was down three percentage points in the past year. The number of SMEs receiving payments online for sales made over the internet also grew, with the proportion of SMEs receiving payments for sales over the internet increasing from 67 per cent to 70 per cent in the past year. Once again, SMEs were most likely to report that they were making sales online to customers in their local area, with 63 per cent reporting they mainly sold to customers in the same city or town. Of those SMEs that sold online, 27 per cent had made sales to customers overseas. Digital business strategies While 94 per cent of SMEs reported that they were online, only 17 per cent of those reported that they had some form of strategy for their businesses digital activities. For most SMEs that did have a digital business strategy, it was most likely to be focused on internet and websites, with only 36 per cent including a mobile component and 33 per cent including a social media component. Over four in ten SMEs with a digital business strategy have had it for less than a year, and over three in four had developed their strategy in-house. Page 5

8 Levels of computer ownership Introduction The Sensis e-business Report has monitored the penetration of computer technology in the small business sector since 1994 and for medium-sized businesses since This section provides an overview of the extent computer technology has been taken up in the work places of small and medium-sized businesses. Equipment ownership The 2010 Sensis e-business Report found 96 per cent of SMEs reported owning a computer of some description, which was virtually unchanged in comparison to the past year. Desktop computers were the most common, with 93 per cent of SMEs reporting they owned at least one desktop computer. There was also little change in notebook computer ownership, with some 61 per cent of SMEs owning at least one notebook computer (60 per cent of small businesses and 79 per cent of medium businesses). There was little difference in equipment ownership between metropolitan and regional areas, with 97 per cent of SMES reporting computer ownership in metropolitan areas compared to 95 per cent. All Business Manufacturing Building/Construction Wholesale Trade Retail Trade Transport/Storage Finance and Insurance Health and Community Services Cultural, Recreational & Personal Services Accommodation, Cafés and Restaurants Computer ownership by industry sector Communication, Property & Business Services Desktop computer 93% 88% 99% 9 99% 87% 89% Notebook computer 6 63% 48% 6 63% 55% 7 82% 46% 6 Any computer 96% 97% 9 99% 96% 99% 96% 93% Whilst historically there has been some difference in computer ownership among businesses in different states and territories, the overall difference changed little in the past year. The highest level of computer ownership was in New South Wales (99 per cent), while the lowest was in Tasmania (90 per cent), making an overall gap in computer ownership of nine percentage points, up marginally from a gap of eight percentage points last year. Most states and territories recorded similar levels of computer ownership in the past year, with the largest change being recorded by SMEs in the Australian Capital Territory, where computer ownership decreased by four percentage points over the past year. Levels of computer ownership also varied across the industry sectors. At the high end of the scale, SMEs in the finance and insurance sector recorded a 100 per cent computer ownership result. By comparison, SMEs in the building and construction sector recorded a result of 91 per cent of SMEs owning a computer of some description, resulting in a nine percentage point gap across industry sectors. All Businesses 1-2 Employees 3-4 Employees 5-9 Employees Employees Employees Employees Total Small (1-19) Total Medium (20+) Total Metropolitan Total Rural Computer ownership by business size and location Desktop computer 93% 89% 97% 97% 97% 93% 9 Notebook computer % 83% 8 68% 6 79% 62% Any computer 96% 93% 99% 96% 97% 57% Page 6

9 The greatest increase during the past year in telecommunication equipment ownership was in the proportion of SMEs reporting ownership of mobile e- mail, up eight percentage points to 25 per cent. Continued growth was also seen in SMEs using wireless technologies for location and navigation and VOIP. Some 42 per cent of SMEs reported having a satellite navigation device, either in-car or hand-held (up six percentage points for each of the past two years), with 26 per cent reporting they have a mobile device, also up six percentage points over the past year. While 3G mobile phone and mobile ownership were both up, there was a continued decrease in the ownership of mobile phones without internet access, down a further five percentage points. There was also a decrease in the proportion of SMEs with an advanced telephony system, but some growth in the proportion of SMEs reporting a LAN network in their business. Blackberry/mobile Telecommunication equipment ownership Fixed line telephone (landline) Standard mobile telephone (no internet access) A LAN network supporting your business 3G mobile telephone (with internet access) An advanced telephony system (eg. PABX or IVR) Satellite navigation system (in-car or handheld) VOIP (Voice over internet protocol) 2008 All SMEs 96% 7 52% % All SMEs All SMEs Small Medium Business Business 96% 66% 62% 3 36% 2 17% 96% 6 59% 6 26% 42% 26% 25% 97% 6 57% 62% 23% 4 25% 23% 73% 9 85% 8 39% 63% Computer ownership trends The proportion of SMEs that owned a desktop computer increased to 93 per cent in the past year. This was balanced by a small fall in notebook ownership among SMEs, which decreased from 63 per cent to 61 per cent over the past year. While the proportion of SMEs with desktop computers was up marginally in the past year, the proportion with notebook computers decreased by two percentage points, reflecting a plateau of notebook ownership over the past three years. There was little change in the level of notebook ownership for small businesses, with the largest decrease being recorded in the level of notebook ownership by medium businesses. Equipment ownership trends Small business 83% 2 Feb 99 85% 22% Feb % 93% 92% 93% 26% 01 Base = All businesses Equipment ownership trends Small and medium business 29% 35% Desktop Computer Notebook Computer Equipment ownership trends Medium business 63% % 19% % 92% 92% 93% 6 62% 6 48% 5 39% 42% 33% 26% 27% 19% 99% 97% 99% 99% 99% 99% 97% 87% % 82% 85% 75% 79% 66% 67% 68% 5 Feb 99 Feb Base = All businesses Desktop Computer Notebook Computer Feb 99 Feb Base = All businesses Desktop Computer Notebook Computer Page 7

10 Expenditure in 2009 calendar year Overall average expenditure on computer hardware and software for SMEs in 2009 was $18,800. This was an increase of $7,800 the past year $11,000 in The average level of expenditure on computer hardware during 2008 by SMEs was approximately $12,000. This represents an increase of $5,500 during the past year. The average spend of small business differed greatly from medium businesses. While the average spend for small businesses on computer hardware in 2009 was approximately $7,900, for medium businesses the spend on hardware was $89,900. The average hardware spend for small businesses was $7,900, but the vast majority of small businesses spent far less than this. Over one in five small businesses last year recorded no spend on computer hardware, with over half spending less than $2,000. Eleven per cent of small businesses reported spending more than $10,000 on computer hardware in 2009, which was up two percentage points in the past year. This compares to almost four in 10 medium businesses reporting a spend of more than $10,000 on hardware in SMEs also increased their spend on software significantly in the past year. The average expenditure on software for SMEs was $6,800. This represents an increase of almost $2,300 over the past year. Again, this varied significantly between small and medium businesses, with the average spend for small businesses relatively up $900 to $3,900, compared to $62,500 for medium businesses (an increase of $31,600 over the past year). Over $10k $5k-$10k 1 Don't know 6% $2k-$5k 17% Base = Small businesses Over $50k 25% Don't know 6% Expenditure in 2009 calendar year Small business Hardware No computer Nothing 2 Up to $2k 3 Over $5k 8% $2k-$5k Don't know 8% $1k-$2k Software Expenditure in 2009 calendar year Medium business Hardware $20k-$50k 25% Base = Medium businesses ($000 s) Nothing 6% Up to $10k 17% Over $20k 28% $10k-$20k 2 Don't know $10k-$20k Trends in mean expenditure No computer Nothing 25% Up to $1k 33% Software Nothing 13% $5k-$10k 12% Up to $5k 25% This was also the case with hardware with most small businesses reporting they spend far less than the average spend on computer software. Some 25 per cent of small businesses reported no spend on software in 2009, and an additional 33 per cent reported a software spend of up to $1,000. Eight per cent reported spending more than $5,000 on software in 2009 (unchanged in the past year). This compares with 51 per cent of medium businesses which reported spending in excess of $5,000 on computer software over the same period. Small Business Hardware Software Medium business Hardware Software Base = All businesses with computers Page 8

11 Expected expenditure in 2009 calendar year Overall, SMEs were expecting to decrease their spend on computer hardware and software in 2010 compared to 2009 levels. Total average expenditure on computer hardware and software for all SMEs in 2010 was expected to be $16,400. This would represent a decrease of $2,400 from the total spend of $18,800 SMEs reported spending on hardware and software in On average, small businesses were expecting to spend $9,800, with medium businesses expecting to spend $138,300 on computer hardware and software in In terms of expenditure on computer hardware, SMEs were expecting to spend significantly more in 2010 than they did in The average expected spend across all SMEs was $8,800, considerably less than the $12,000 spent in Increases in spending on hardware were expected in small businesses, which were expecting to spend $5,500, up from $3,400 in However, medium businesses were expecting to spend $68,200, much lower than the $89,900 they reported spending in Despite expectations for a lower hardware spend, SMEs were expecting to increase their spend on computer software in The average expected spend across all SMEs was $7,600 reflects an increase of $800 per business on the levels recorded this year. Small businesses were expecting to spend $4,300, up from $3,900 reported in This trend was also recorded for medium businesses, which expect to increase their average software spend from the $60,50 recorded in 2009 to an expected $70,100 in Over $10k 8% 5k-$10k 5% $2k-$5k 13% Expected expenditure in 2010 calendar year Small business Hardware Don't know 8% Base = Small businesses $10k-$20k 4 Up to $2k 26% No computer Nothing 36% Don't know 1 Over $5k No computer $2k-$5k 1 Software Nothing 32% $1k-$2k 8% Up to $1k 25% Expected expenditure in 2010 calendar year Medium business Hardware Don't know 6% Nothing Over $50k 18% 3% $20k-$50k Base = Medium businesses Up to $10k 28% Don't know 9% Over $20k 2 $10k-$20k Software $5k-$10k 15% Expenditure on software and hardware maintenance 2009 actual expenditure Nothing 2 Up to $5k expectations On top of hardware and software actual and expected spends, SME expenditure on maintaining their IT systems was also significant. Overall, SMEs reported having spent an average of $9,500 on maintaining their systems, with small businesses spending $5,100 on average and medium businesses spending $92,400 on average. This was significantly higher than the software spend reported by businesses, although not as high as the amount SMEs that reported they were spending on hardware in the past year. Looking forward, SMEs were expecting to spend some $9,600 on IT systems maintenance in 2010, up $100 on the last year s spend. Small Business Medium business All SMEs Base = All businesses with computers $5,100 $92,400 $9,500 $5,200 $90,900 $9,600 Page 9

12 Getting connected Connection levels The proportion of SMEs connected to the internet was unchanged during the year at 94 per cent. This reflected a small fall in small businesses internetconnectivity from 95 per cent to 94 per cent, with an increase recorded by medium businesses at 100 per cent. Of the six per cent of small businesses not connected to the internet, two per cent owned a computer but had not connected to the internet, while the remaining four per cent did not own a computer. These latest figures reflect that there has been relatively little change in the overall proportion of SMEs connected to the internet in the past four years. The finance and insurance sector again recorded the highest rate of internet-connectivity at 100 per cent, closely followed by the communications, property and business services sector at 98 per cent. The lowest level of connectivity was in the health and community services sector, with 88 per cent of SMEs reporting they have an internet connection, a fall of eight percentage points over the past year. This was also the sector most likely to have computers without an internet connection. This sector reported eight per cent of SMEs with computers that were not connected to the internet, in addition to four per cent of SMEs in that sector with no computer at all. Metropolitan businesses reported a rate of 95 per cent internet penetration which was slightly higher than the result for regional businesses at 93 per cent. The connection levels amongst metropolitan SMEs has remained stable in the past year, compared to a marginal decrease of one percentage point for SMEs in regional areas. All Businesses 1-2 Employees 3-4 Employees 5-9 Employees Employees Employees Employees Total Small (1-19) Total Medium (20+) Total Metropolitan Total Rural Base = All businesses Internet connections by business size and location No computers 7% 3% 5% Internet connections by industry sector Manufacturing Building/Construction Wholesale Trade Retail Trade Transport/Storage Communications, Property & Business Services Finance and Insurance Health/Community Services Personal Services Accommodation, Cafés and Restaurants Base = All businesses Use internet 89% 99% 93% Do not use 2% 2% 2% 2% No computers 3% 9% 2% 7% 6% Trends in internet connections Use internet 9 88% 92% 89% Do not use 2% 3% 8% 5% It is worthwhile revisiting recent historical trends in order to fully appreciate just how significant the internet has become as a business tool. Since 1997, the proportion of small businesses that are connected to the internet has risen from 34 per cent. Over this time the trend among medium businesses has been nearly as impressive, rising from 65 per cent to 98 per cent. The largest component of this increase occurred between 1997 and 2001, with increases recorded since then being comparatively small until reaching the 90 per cent level in Since then changes in the levels of internet connection by small businesses has been incremental. 23% 97 65% 3 Feb 98 83% 48% Feb 99 89% 6 Feb 00 99% 97% 75% 01 Medium business 79% % 04 87% 05 99% 99% % 93% Small business Page 10

13 Reasons for not connecting Among the very small number of businesses that had computers but were not connected to the internet, the overwhelming reason given by SMEs that were not connected to the internet was a view they did not trust it to protect their information. Reasons SMEs not connected to internet (unprompted) Don't trust it 45% The other three key reasons given for not connecting to the internet despite owning a computer were a lack of knowledge and technical and service issues, which were each given by 20 per cent of those SMEs. A lack of knowledge was the most common reason given by SMEs in regional areas for not having connected to the internet. Lack of knowledge Technicalproblems No need Use at home 8% 16% 2 2 Overall, 93 per cent of SMEs reported being connected to the internet at home, up two percentage points in the past year. Base = All businesses with computers not connected (2 per cent of all SMEs) Expectations for internet connection While 94 per cent of SMEs are already connected to the internet, this leaves some six per cent of SMEs that are not. Of those businesses, only an additional two per cent believe they will connect their businesses to the internet within the next 12 months, up one percentage point from the past year. The remaining four per cent of businesses do not expect to do so in the next 12 months. This level of expectation is the same as last year. The strongest resistance to future internet connectivity, by SME size, came among those businesses with one to two employees, which was the business size with the lowest level of internet connectivity. Six per cent of these businesses stated they were not expecting to connect to the internet in the next 12 months. All Businesses 1-2 Employees 3-4 Employees 5-9 Employees Employees Employees Employees Total Small (1-19) Total Medium (20+) Total Metropolitan Total Rural Base = All businesses *Includes Not sure Expectations for internet connection by business size and location Use internet 89% 99% 93% Expect to connect 2% 5% 2% 3% *Do not expect 6% For SMEs expecting to connect to the internet for the first time within the next 12 months, the number one reason was a belief that it would increase their business performance and sales, followed by wanting to use , and being able to be contacted by their customers and clients. Page 11

14 Broadband connections Broadband remained the almost universal standard for internet in Australian businesses. Some 96 per cent of SMEs that were online currently reported having broadband access to the internet, which is unchanged from the past year. ADSL was the most popular form of broadband connection amongst SMEs, being the choice of 56 per cent of those with broadband access to the internet, followed by 20 per cent with a cable connection and 17 per cent with a wireless connection. There was virtually no change in the types of broadband connection that SMEs reported in the past year, with no more than one percentage point variation from last year s results for any connection type. Overall, some 22 per cent of SMEs with an internet connection reported that they intended to get a faster internet connection in the next twelve months. SMEs in metropolitan areas were more likely than those in regional areas to report this intent (24 per cent compared to 18 per cent in regional areas). Of those businesses connected to the internet, the level of broadband connection was highest amongst SMEs in New South Wales (99 per cent each) and lowest in South Australia (93 per cent). In terms of industry sector trends, the communications, property and business services and manufacturing sectors had the greatest proportion of online businesses with broadband connections at 99 per cent each. The lowest level of broadband connection occurred in the health and community services sector at 89 per cent. Accessing the internet Do you currently have broadband access to the internet? Total Small Business Medium Business Yes have broadband 96% 96% 99% No do not have broadband 3% 3% Don t know How do you currently access the internet? (Amongst those with broadband access) DSL/ADSL Cable 2 Wireless 17% Satellite Don t know 5% Base = SMEs with internet access Positive Negative No real impact SME broadband access How long has your business had broadband access? Total Total 76% 2 Small Business Over 12 months Less than 12 months 2% 2% Has the introduction of broadband access had a positive impact, a negative impact or no real impact on your business? Base = Have broadband access Small Business 76% 2 Reasons for broadband connection (unprompted) Medium Business Medium Business 82% 18% The main reason SMEs identified for introducing broadband access was due to the speed of access. Overall, 65 per cent of SMEs with broadband access identified this factor. The next most important reasons for having broadband access involved increased internet efficiency (28 per cent) and being able to access more applications (19 per cent). Speed of access To increase Internet efficiency Access more applications To free up 'phone lines Cost Use 28% 19% 1 9% 3% 65% Base = All businesses with broadband Page 12

15 Using the internet How the internet is used current and expected usage For those SMEs with internet access, the number one use of the internet by SMEs was again communicating via , identified by 98 per cent of internet connected businesses. Given the high level of penetration which exists among internetconnected businesses, only a further one per cent of SMEs expect to take up this application in the next year. Usage of this application was up by a marginal one percentage point over the past year, with this use at almost saturation level. The second most important application of the internet reported by SMEs was looking for information about products and services. This is a current use for 91 per cent of SMEs connected to the internet, down one percentage point from 92 per cent last year. The next most important applications of the internet were getting reference information or research data, internet banking and looking for suppliers of products and services. These applications were identified by 88 per cent of internet-connected SMEs each. The application which recorded the greatest increase in usage amongst SMEs in the past year was using a website to advertise or promote a business, which was up by five percentage points in the past year. This was followed by accessing directories such as the Yellow Pages and using online auction sites to sell goods or services, which were both up four percentage points in the past year. This year saw strong growth for the majority of applications. However, it is also interesting to also look at which online applications are still expecting significant growth going forward. The strongest projected rise in use of any internet applications for the year ahead was using a website to advertise and promote businesses, as well as advertising businesses on other websites, which were both nominated by 10 per cent of SMEs as something they wanted to do in the next year. Current and expected uses of the internet - summary To communicate via To look for information about products and services To get reference information or research data Internet banking To look for suppliers of products or services To access directories such as the Yellow Pages To pay for products and services To access and use online catalogues To place orders for products and services To receive payments for products and services To streamline communications with customers and staff To use a website to advertise or promote your business To take orders for products and services To monitor your markets or the competition To promote the business using marketing To use online auction sites to sell goods or services To advertise your business on other websites Base = All businesses with internet Currently use 9 88% 88% 88% 87% 8 79% 79% 68% 63% 62% 42% 3 23% 22% Expect to use 3% 3% 3% 3% 3% 5% 5% 6% 1 5% 5% 9% 6% 1 Total 99% 92% 9 92% % 8 79% 73% 67% 47% 4 29% 32% Page 13

16 Current usage by business size For the most popular internet application, communication via , there was only marginal difference in usage by firm size. This application was used by 98 per cent of small businesses, compared to 99 per cent of medium businesses that were connected to the internet. The second most important internet application was to look for information about products or services. There was slightly more difference in the use of this application between medium businesses (94 per cent) and small businesses (91 per cent). This gap has fallen to three percentage points last year, from four percentage points the year before and 10 percentage points the year before that. The internet application which demonstrated the greatest variation between small and medium business usage was again using a website to promote their business. Some 83 per cent of medium businesses with the internet identified this, compared to 61 per cent of small businesses with the internet. This gap of 22 percentage points was the highest for any internet application. The only internet application used by more small businesses than medium businesses was using online auction sites to sell goods and service. This application was used by 23 per cent of small businesses compared to 33 per cent of medium businesses. Receiving payments for products or services was used by equal number of SMEs (81 per cent each). All other applications were used by a higher proportion of medium businesses. Current uses of the internet by business size To communicate via To look for information about products and services To look for suppliers of products or services To get reference information or research data Internet banking To access directories such as the Yellow Pages To pay for products and services To access and use online catalogues To place orders for products and services To receive payments for products and services To streamline communications with customers and staff To use a website to advertise or promote your business To take orders for products and services To monitor your markets or the competition To promote the business using marketing To use online auction sites to sell goods or services To advertise your business on other websites Base = All businesses with internet All SMEs 9 88% 88% 88% 87% 8 79% 79% 68% 63% 62% 42% 3 23% 22% Small business 9 88% 88% 87% 86% 8 79% 78% 68% 6 62% 42% 3 23% 22% Medium business 99% 9 92% 8 85% 9 75% 78% 83% 66% 45% 22% 3 Page 14

17 Trends in usage In terms of trends in usage of various internet applications across SMEs, the largest rise during the year was split between using a website to advertise or promote their business, accessing directories such as the Yellow Pages and using online auction sites. Use of these applications rose by four percentage points each in the last year. Overall, 59 per cent of SMEs reported using a website to advertise or promote their business, with the greatest usage among SMEs in the accommodation, cafes and restaurants sector with 74 per cent. The greatest usage of the internet to access directories such as the Yellow Pages by an industry sector was the communications, property and business services sector with 89 per cent. Using the internet to use online auction sites was most predominant in the retail trade sector (30 per cent). Increases in usage were also recorded for receiving payments for products or services, taking orders for products and services, paying for products and services, streamlining communications with customers and staff and internet banking. There were six applications that recorded declines in usage over the past year: getting reference information or research data, advertising a business on other websites, promoting a business using marketing, looking for information about products and services, monitoring markets and competition and communicating via . There was no change in the usage level for placing orders for products and services and for accessing and using online catalogues in the past year. Having recorded a three percentage point fall in usage levels amongst SMEs over the past year, using the internet to get reference information or research data was still one of the top applications for SMEs and was most favoured by SMEs in the communications, property and business services sector (92 per cent). Trends in current uses of the internet based on all businesses To use a website to advertise or promote business To access directories such as the Yellow Pages directories To use online auction sites To receive payments for products and services To take orders for your products and services To pay for products and services To streamline communications with customers and staff % 2 63% % 78% 18% 67% 62% % 82% 22% 7 58% 76% 6 Change 2009 to % +2% +2% +2% Internet banking To place orders for products and services To access and use online catalogues To communicate via To monitor your markets or the competition To look for information about products and services To promote the business using marketing To advertise your business on other websites To get reference information or research data To look for suppliers of products or services 78% 67% 67% 92% 4 83% 27% 2 79% N/A % 3 23% 86% N/A 83% 92% 4 86% % 83% +2% % -3% N/A Base = All businesses Page 15

18 What are the essential uses? The most essential internet application for SMEs was again . This was identified by 81 per cent of businesses as an essential application, down three percentage points in the last year. Metropolitan businesses were more likely to identify as an essential application compared to regional businesses (84 per cent versus 77 per cent). The next most important application identified as essential was internet banking at 74 per cent, down one percentage point in the past year. Of all industry sectors, SMEs in the manufacturing and health and community services sectors were most likely to identify internet banking as an essential internet application (80 per cent each). This contrasts with SMEs in the accommodation, cafes and restaurant sector which were least likely to regard it as an essential application (58 per cent). There were six other applications considered essential by the majority of SMEs: finding reference information or research data (66 per cent); looking for information about products and services businesses might buy (63 per cent); paying for products and services (57 per cent); placing orders for products and services and receiving payment for products and services (53 per cent each); and streamlining communications with customers and staff (51 per cent each). Only three applications were regarded as essential by an increased number of SMEs the greatest increase was using online auction sites to sell goods, which rose by three percentage points over the past year, however only 11 per cent of SMEs regarded this application as essential. The other uses that increased were paying for products or services and placing orders for products and services, both procurement-related uses. What are the essential uses? To communicate via Internet banking To get reference information or research data To look for information about products and services To pay for products and services To place orders for products and services To receive payments for products and services To streamline communications with customers and staff To access directories such as the Yellow Pages To access and use online catalogues To use a website to advertise or promote your business To take orders for products and services To monitor your markets or the competition To promote the business using marketing To advertise your business on other websites To use online auction sites to sell goods or services Base = All businesses with internet All SMEs 8 66% 63% 57% 53% 53% 5 48% 47% 4 43% 2 19% 13% Small Business 8 66% 6 53% 53% 5 47% 47% 43% 43% 23% 18% 13% Medium Business 85% 76% 69% 59% 57% 52% 5 65% 58% 49% 43% 32% 27% 1 13% Page 16

19 Technology in Australian households Introduction While this report focuses on the online journey of Australia s SMEs, it is interesting to also look at the other side of the economy Australian households to see how they compared to Australian businesses. Equipment ownership and internet connections Overall, Australian consumers reported a lower level of computer ownership, internet connectivity and usage than Australian SMEs. Some 91 per cent of Australian households reported having a computer of some description in 2010, a rise of one percentage point over the past year. Some 75 per cent had a desktop computer (down three percentage points), with notebook ownership currently at 58 per cent (up eight percentage points). This compares with 93 per cent of SMEs with a desktop computer, 61 per cent with a laptop computer and 96 per cent having a computer of any description. In terms of internet connections, some 88 per cent of households were internet-enabled (up three percentage points in the past year), compared with 94 per cent of SMEs. The proportion of households using a dial-up internet connection continued to decline, at only eight per cent of households (down from 13 per cent). While there was a marginal increase in the proportion of households with a standard broadband connection at 60 per cent (up one percentage point), there was a much larger 14 percentage point increase in the proportion of households with a wireless broadband connection, at 45 per cent. A desk top computer or PC A notebook computer Total computer Dial-up internet Broadband internet Wireless broadband Total internet Computerisation in the home Currently have 75% 58% 9 8% 6 45% 88% 2010 Expect to get in next 12 months 12% 2 5% 7% Cf Currently have 78% % 59% 3 85% Q. Which of the following items do you currently own? Q. Which do you intend to get in the coming 12 months either for the first time, in addition to what you now have, or as a replacement? Base = All consumers Total Male Female Yrs Yrs Yrs Yrs Yrs Yrs 65 + Yrs Employed full time Employed part Not in workforce Studying Retired Internet usage in the last 12 months 66% 72% 92% 92% 9 96% 97% 92% 97% 88% There is still some evidence of a digital divide, with only 72 per cent of Australians with a household income of up to $35,000 connected to the internet, which declined by a marginal one percentage point in the past year. In comparison, 99 per cent of households with an income of more than $85,000 were connected to the internet, a gap of 27 percentage points Q. Have you, personally, used the internet in the last twelve months, either at home, work or another location? Base = All consumers The groups most likely to report below average usage were those aged 65 and above and retirees. For those Australians 65 years and above only 66 per cent reported accessing the internet in the past 12 months. However, usage in this age group has increased by six percentage points over the past year. Page 17

20 What Australians are doing online With further increases in the proportion of Australians using the internet, the Sensis e-business Report also found the level of usage of most internet applications by Australians has also increased significantly in the past year. Looking for information on products or services continued to be by far the most used internet application, used by 82 per cent of Australians, up four percentage points in the past year. This compared to the next most popular application, paying for purchases or bills, which was reported by 65 per cent of Australians, up by three percentage points in the past year. This was closely followed by ordering goods or services and banking at 64 per cent each. Only two applications saw declines in usage over the past year: writing a blog and belonging to an online community, which both declined by two percentage points over the past year. The greatest increase in usage in the past year was in the proportion of Australians who reported using a social networking site, with 56 per cent of Australians reporting they have done this in the past 12 months, up 15 percentage points in the past year. Also increasingly popular was using the internet to make phone calls and downloading or streaming video content. Overall 35 per cent of Australians reported they had used the internet to make phone calls in the past year, up 14 percentage points. Some 47 per cent of Australians reported they downloaded or streamed video content in the past year, up 11 percentage points. Internet applications in the last 12 months Looked for information on products or services Paid for purchases or bills Ordered goods/services Undertaken banking Made bookings Used a social networking site Read a blog Supplied personal information online Downloaded or streamed video content Bought through an online auction site Belonged to an online community Used the internet to make phone calls Written a blog Sold through an online auction site Uploaded a video onto the internet Q. In the last twelve months have you undertaken any of the following via the internet? Internet users last 12 months % 69% 68% 6 45% 43% % 38% 15% 18% 2 All Australians 82% 65% % 42% 4 47% 32% 25% 35% 1 16% 19% Internet applications in the last 12 months Trends All Australians Used a social networking site Used the internet to make phone calls Downloaded or streamed video content Uploaded a video onto the internet Looked for information on products or services Undertaken banking Ordered goods/services Bought through an online auction site Supplied personal information online Paid for purchases or bills Made bookings Sold through an online auction site Read a blog Written a blog Belonged to an online community % 1 78% % 37% 62% % 27% Q. In the last twelve months have you undertaken any of the following via the internet? % 47% 19% 82% % 4 65% 63% 16%% 42% 1 25% Change +15% % % +3% +3% +3% +3% +2% + -2% -2% Social networking Overall, 56 per cent of Australians reporting they had used social networking sites in the past year. Use of social networking sites in last 12 months Age continued to influence use of social networking sites, with younger Australians much more likely to use a social networking site, however the greatest increases in the past year were amongst older users. There was a marginal one percentage point increase in usage for the 14 to 17 year old age group, and a four percentage point decrease in the 18 to 19 year old age group. By contrast the greatest increase in usage in the past year was amongst those aged in their 40s, with usage up by 26 percentage points in the past year. At the 65 and over end of the age spectrum there was also a nine percentage point increase in usage of social networking sites in the past year. Total Male Female Yrs Yrs Yrs Yrs Yrs Yrs 65 + Yrs Employed full time Employed part Not in workforce Studying Retired cf 2008 Base = All consumers 1 19% 38% % 5 59% 62% 55% 67% 9 86% 86% 89% Page 18